Combined Federal & Ontario Top Marginal Personal Tax Rates for 2010-2016
Year Eligible dividend Ineligible dividend Capital gains Other income
2010 26.57% 32.57% 23.21% 46.41%
2011 28.33% 32.57% 23.21% 46.41%
2012-2013 29.54% 32.57% 23.21% 46.41%
2014-2015 29.52%/31.67%/33.82% 36.45%/38.29%/40.13% 23.21%/23.98%/24.77% 46.41%/47.97%/49.53%
2016 39.34% 45.30% 26.76% 53.53%

Effective July 1, 2012, the combined top rate in Ontario increased from 46.41% to 49.53% on “other income”. Similiar rate increases would apply to other types of income. This higher marginal tax rate is effective on taxable income over $509,000. Effective tax rates on dividends and capital gains will increase accordingly.Effective tax rates at this level of taxable income for non-eligible and eligible dividends will be 36.47% and 33.85% respectively.

Effective January 1, 2014, the federal gross-up and dividend tax credit has been modified for non-eligible dividends so that the effective top tax rate on this type of dividend income will increase. The middle rates noted for 2014 in the table are the marginal tax rates created by Ontario’s 2014 Budget creating another bracket $150,000 to $220,000.

For 2014, the first rate is the top marginal tax rate for taxable income above $136,270 and below $509,001. The second rate is the Ontario’s rate for the new bracket. The third rate is the top marginal tax rate for taxable income above $509,000. For 2015, the top federal rate threshold commences at $138,586.

2016 Tax Rate Changes

On December 7, 2015, the federal government announced a decrease in the 2nd federal marginal tax rate bracket to 20.5% from 22% and an increase in the top federal marginal tax rate bracket to 33% from 29% for income exceeding $200K. Income from $45,283 to $90,563 attracts a federal marginal tax rate of 20.5%. Income from $140,389 to $200,000 attracts a federal marginal tax rate of 29%. At the end of 2016, the second bracket was divided into two separate brackets. Income exceeding $45,282 to $90,563 will attract a federal tax rate of 20.5%.Income exceeding $90,563 to $141,388 will attract a federal tax rate of 26%.

Refundable tax rates for charitable donations

For donations of $200 or less, the federal refundable tax credit is 15%. For donations more than $200, the federal refundable tax credit is representative of the top marginal tax rate of 29% even if you were not in that marginal tax bracket.

With the introduction of the top federal marginal rate of 33% on taxable income over $200,000, it was presumed that the refundable tax rate on donations more than $200 would be 33%.

The federal tax credit for donations more than $200 will only be at 33% if your taxable income is over $200,000.

Provincial refundable tax credits (that vary by province of residence) are added to the foregoing federal refundable tax credits.

Combined Federal & Ontario refundable tax credits for charitable donations:

  • First $200 of donations- 20.05%
  • Donations more than $200 where taxable income is under $200,000-40.10%
  • Donations more than $200 where taxable income is over $200,000-44.16%